RegulationMar 3 2015

Senior managers regime starts this time next year

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Senior managers regime starts this time next year

A tough new authorisation and certification regime for senior executives and managers across the banking sector will start on the 7 March next year, the Treasury has announced.

The implementation date was confirmed in an announcement today (3 March), which also stated documentation to support authorisations for all affected staff under the new system will need to be submitted to the regulators by 8 February 2016.

The move follows the publication of the joint Financial Conduct Authority and Prudential Regulation Authority consultation papers in July and December last year on strengthening accountability in banking.

Last month, the two regulators set out how they will hold senior managers in banks, building societies and designated investment firms to account.

It detailed that non-executive directors with specific responsibilities, such as chairmen, will come under the new senior managers regime, but it will not apply to those non-executive directors who do not perform delegated responsibilities.

The rules came under fire by law firm CMS who warned the new regime is too tough on non-executive directors, stating there are “countless examples” of non-executives providing constructive oversight and challenging how banks and insurers are run.

Earlier drafts of the rules had discussed extending the rules to other areas of financial services which will still operate under the authorised persons regime, but this is likely to be done in a phased approach over a number of years.

Andrea Leadsom, the economic secretary to the Treasury, stated that ensuring that banks are properly run is vital for the health of the economy.

“That’s why I’m delighted to confirm the next step of the government’s work to raise conduct standards in the banking sector, including the new criminal sanctions for reckless misconduct by bankers we are introducing.

“We are determined to make sure that all banks in Britain operate with the highest standards.”

peter.walker@ft.com